Inventory of a firm is a ________ variable, whereas change in inventories during a year is a ________ variable.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → stock; flow
Inventory is the stock of unsold goods at a point of time, so it is a stock. Change in inventories takes place over a period, so it is a flow.
NCERT (2026-27): “2.2.1 The Product or Value Added Method … Inventory is a stock variable. …” “2.2.1 The Product or Value Added Method … Notice that change in inventories takes place over a period of time. Therefore it is a flow variable. …” |